Workers’ Comp Issues

March 23, 2021

Claims for workplace emotional distress damages have raised the issue as to whether such claims are within the exclusive jurisdiction of workers’ compensation tribunals. The law on the subject is fairly recent. It has potential fatal impact on civil claims, either in contract or tort, for aggravated damages. It is very important to understand the application of this question as the misinformed plaintiff may well have no civil claim and be time barred from the workers’ compensation remedy.

Table of Contents

WCA Defence to Claims of Workplace Unfair Conduct?

The argument advanced in circumstances in which the employee is covered by workers’ compensation entitlement for a workplace injury is that the sole avenue of redress is this statutory scheme and hence there can be no civil action.

The General Test for WC Application

For such a result to follow, there are two building blocks required. The first is that intentional conduct such as sexually harassing behaviour is covered by the relevant act. The second is that the pertinent statute allows for compensation for emotional distress.

As to the first issue, all statutes define “accident” to mean an event well beyond its normal meaning to include intentional conduct.¹

The second test, which requires that emotional distress claims be allowable workers’ compensation entitlements, raises a more difficult issue in certain jurisdictions.

Case Law

Alberta

Alberta’s workers’ compensation statute does provide for such a claim based on emotional distress.

This resulted in the dismissal of an action brought for mental anguish based on allegations that the plaintiff had been bullied by his co-workers. ² It mattered not whether the claim was brought in tort or contract.

The above decision was appealed and upheld. The action was dismissed, save the amended claim for constructive dismissal based on the same allegations of abuse. ³ ⁴

A similar result followed with respect to allegations made in an action for workplace harassment and negligence. ⁵

Ontario

A similar decision was made in a recent Ontario case. The employee had commenced a civil action claiming that she had been bullied and harassed in her employment as a supervisor of hospitality services. She had also claimed that this conduct was a constructive dismissal. She claimed moral, punitive and wrongful dismissal damages.

This was met by a motion by the employer before the Workplace Safety and Insurance Appeals Tribunal to dismiss the civil action. The claim was dismissed, including the constructive dismissal component. The above Alberta decision was not referenced in the reasons. The decision noted that the significant issue to be reviewed is the nature of the injury. It matters not that the remedies under the statute are different from those sought in the civil claim. As noted, there was a claim made for punitive damages and for wrongful dismissal, neither of which would be allowed under the statute.

A second decision followed which also dismissed the claim in its entirety, again including the claim made for constructive dismissal based on the workplace abusive behaviours, as alleged. This included claims for mental distress, aggravated or moral damages and punitive damages in addition to the constructive dismissal claim.

This are serious consequences. Counsel must be alert to the need to apply to the correct forum, failing which surely disaster will follow.

B.C.

A recent May 2020 decision in British Columbia ⁶ examined similar issues following the above Ontario decision.

The plaintiff had made a claim for constructive dismissal based on an abusive work relationship in which she was tormented with inappropriate sexually suggestive conduct by her employer. The claim alleged a continuum of abuse during the employment relationship which ultimately resulted in her assertion that her employment had been constructively terminated.

The defence moved to dismiss the claim, in part, based on the Worker’s Compensation scheme as the plaintiff had made a claim for mental distress damages and also aggravated damages. The matter arose on a preliminary motion to dismiss. ⁷

The B.C. statute reads as follows:

127 (1) Subject to subsection (2),

(a) the compensation provisions are in place of any right and rights of action, statutory or otherwise, founded on a breach of duty of care or any other cause of action, whether that duty or cause of action is imposed by or arises by reason of law or contract, express or implied, to which a worker or a dependant or family member of the worker is or may be entitled against

(i) the employer of the worker,

(ii) an employer within the scope of the compensation provisions, or

(iii) any other worker,

in respect of any personal injury, disablement or death of the worker arising out of and in the course of employment, and

(b) no action lies in respect of such an injury, disablement or death.

(2) Subsection (1) applies only if the action or conduct of

(a) the employer or the employer’s servant or agent, or

(b) the other worker,

that caused the breach of duty of care arose out of and in the course of employment within the scope of the compensation provisions.

The B.C. statute requires that the applicant prove a diagnosed mental illness as defined in the DSM.

There were three issues to be determined, such being a claim made for mental distress suffered in the course of active employment, a plea of aggravated damages resulting from the termination of employment and thirdly, the action for constructive dismissal, which was based in the same allegations of abuse.

As to the mental distress claim, the Court stated that this claim may amount to a personal injury or mental disorder as captured by the statute, which was then awaiting determination of this issue by the Workers’ Compensation Appeal Tribunal. It is not apparent from the decision as to why the remaining issues were not also to be determined by the same body.

The Court was of the view that the aggravated damages claim would not be caught by the statute as such a claim is not limited to the personal injury or mental disorder as defined within the statute.

In addition, the judge expressed the view that such a claim made as ancillary to a constructive dismissal plea, one not made in tort, would not be conclusively be seen as within the purview of the legislation and would be “an open question”, at least open enough to survive the motion to dismiss which requires a rigorous test to succeed. The accuracy of this is very debatable.

The Act does not offer an exception to claims made in contract in S. 127(a) above and refers to a generous circle of claims which are captured by its provisions.

This being said, one distinct paragraph of the plea which referenced a continuum of harassing behaviour and consequential emotional harm during the employment relationship was struck as being within the regime of the statute.

Comments on the Above

The court makes a distinction between the vocabulary of “mental distress” and “aggravated damages” which, it is submitted, is incorrect. The terms are synonymous. There may be a distinction between the “intentional infliction of mental distress” and the independent wrong required for an award of aggravated damages but that was not the plea in this case.

The Supreme Court in Honda stated as follows:

To be perfectly clear, I will conclude this analysis of our jurisprudence by saying that there is no reason to retain the distinction between “true aggravated damages” resulting from a separate cause of action and moral damages resulting from conduct in the manner of termination. Damages attributable to conduct in the manner of dismissal are always to be awarded under the Hadley principle. Moreover, in cases where damages are awarded, no extension of the notice period is to be used to determine the proper amount to be paid. The amount is to be fixed according to the same principles and in the same way as in all other cases dealing with moral damages. Thus, if the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages will be awarded not through an arbitrary extension of the notice period, but through an award that reflects the actual damages. Examples of conduct in dismissal resulting in compensable damages are attacking the employee’s reputation by declarations made at the time of dismissal, misrepresentation regarding the reason for the decision, or dismissal meant to deprive the employee of a pension benefit or other right, permanent status for instance (see also the examples in Wallace, at paras. 99‑100).

In addition, the Court concluded that as the workers’ compensation claim required a DSM diagnosis, that the plaintiff was allowed to sue civilly. This seems to be a questionable conclusion. The Act throws a wide net over the type of events covered by its terms, which would include workplace abuse. The fact that the plaintiff did not then meet the test of eligibility to recover benefits due to a failure to show a DSM diagnosis would not appear to deny the application of the Act. This position is stated as the law by the B.C.C.A.

The decision is also not consistent with a prior WCAT decision in 2020 in which the plaintiff sued, alleging the tort of the intentional infliction of mental distress due to what was sexually harassing conduct, including touching. The civil action was dismissed.

This is unlikely to be the last word on this subject.

Back to the General Test

The second aspect of this principle, that is, to the question generally of the right to sue, is controversial as many other jurisdictions do not allow workers’ compensation claims based on emotional distress or limit the context in which such a claim may be made.

For example, Ontario’s statute, until its recent amendment, allowed claims for psychological stress only where there has been an acute reaction to a sudden and unexpected traumatic event. ⁸ This prior statutory provision was successfully challenged as a Charter violation in Workplace Safety and Insurance Appeals Tribunal (2157/09).

The statute’s provision which limits entitlement to benefits due to mental distress was been declared contrary to the equality section of the Charter of Rights and Freedoms and hence unconstitutional. The worker’s appeal accordingly was allowed.

Presumably for this reason, Ontario’s Workplace Safety and Insurance Act was amended effective January 1, 2018 to allow for claims based on emotional suffering as follows:

13(4) Mental stress

(4) Subject to subsection (5), a worker is entitled to benefits under the insurance plan for chronic or traumatic mental stress arising out of and in the course of the worker’s employment. 2017, c. 8, Sched. 33, s. 1.

Personal injury

(4.1) The worker is entitled to benefits under the insurance plan as if the mental stress were a personal injury by accident. 2017, c. 34, Sched. 45, s. 1.

Same, exception

(5) A worker is not entitled to benefits for mental stress caused by decisions or actions of the worker’s employer relating to the worker’s employment, including a decision to change the work to be performed or the working conditions, to discipline the worker or to terminate the employment. 2017, c. 8, Sched. 33, s. 1.

Challenges to the existing legislation and similarly worded statutes in other jurisdictions have met with success.

The statute in Nova Scotia prevented claims based on chronic pain was determined to be contrary to the Charter of Rights and Freedoms. ⁹

A similar successful argument was made with respect to the B.C. statute ¹⁰ which contained wording similar to that of earlier Ontario law which limited the right of the claimant for benefits due to mental distress due to severe reaction to a sudden unexpected event. B.C. passed amending legislation effective July 1, 2012 ¹¹ to allow for workers compensation claims due to a mental disorder which arises due to a reaction to traumatic events in the employment relationship or caused by bullying or harassment at worThis decision, apart from allowing for immediate claims for compensation benefits based on work-related emotional distress claims, also will have tremendous impact on employment law civil claims in which damages for emotional distress is claimed directly.

Decisions allowing for tort claims arising from workplace incidents, ¹² and indeed for moral or aggravated damage claims due to breaches of the implied duty of good faith, ¹³ will be not be allowed where the employee is covered by this legislation.

Suing the Personal Offender When WCA Relevant

Presuming that the workers’ compensation statute allows for an emotional distress claim, it is clear that employee tort claims, negligent or otherwise, cannot be made against the employer in a civil court and hence must be the subject of an application for workers’ compensation benefits. This is so for claims for physical and emotional distress.

The entirety of the civil claim may not, however, be lost, as in certain situations, the victim may be able to sue the alleged offender personally, contemporaneously with a claim for benefits under the statute.

The Test

The issue to be determined is whether the personal offender is acting in an employment related capacity with respect to the alleged offensive actions as contained in the statement of claim. Two factors will then be important. The first is whether the conduct is work related and the second was that the employer had not condoned or accepted a lesser standard of conduct. ¹⁴

The test of what conduct may be “work related” is far different from the broad views taken by the human rights tribunals and indeed by the civil courts. In the case in question, the allegation made in the action was that the defendant had, without her consent, manipulated her neck while she was sitting in the company boardroom and in so doing, had caused her serious personal harm. There was no allegation of sexual impropriety nor did the plaintiff allege that the conduct which caused her harm was intentional. This conduct was found to be “not reasonably incidental” to the role of the defendant as an executive officer. In this particular case, he had been advised not to engage in such activities previously. The action was allowed to proceed.

The summary of the law, given a workplace tort and workers’ compensation coverage in place, is:

There will be no civil action against the employer for physical and/or emotional harm;
There can be a civil claim against a personal wrongdoer where such action may be found to be outside the normal course of employment and not condoned.

There is an argument that the human rights tribunal has no jurisdiction to award damages for any kind of compensatory damages and for lost and future income sums.

There may be a claim allowed alleging that the offensive behaviour constituted a constructive termination. ( given the dichotomy in the Manitoba and Ontario decisions)

Impact of WCA Statutes on Human Rights Claims

There remains a further possible argument that the workers’ compensation statutes may deprive the relevant human rights commission of jurisdiction to award a damage claim for such a violation, given appropriate coverage.

This being said, human rights remedies are not likely precluded where workers’ compensation is in place.

Wording of Ontario Legislation

Section 31 of the Ontario statute states as follows: (highlighting added)

(1) A party to an action or an insurer from whom statutory accident benefits are claimed under section 268 of the Insurance Act may apply to the Appeals Tribunal to determine,

(a) whether, because of this Act, the right to commence an action is taken away;

(b) whether the amount that a person may be liable to pay in an action is limited by this Act; or

(c) whether the plaintiff is entitled to claim benefits under the insurance plan.

The sole case dealing with this issue is a WSIA Appeals Tribunal decision which interpreted its statute to define “action” to be only a civil claim and not a human rights complaint. There are no contrary decisions. It remains to be seen what the law will be when an “action” is indeed commenced to enforce a human rights remedy, as Ontario law permits. The reality is that the amendments to the legislation were not well thought out and that further revisions are required.This case aside, there does remain some risk that these above decisions will have a serious negative impact on the jurisdiction of the human rights body to award compensatory damages and lost income sums where the claim arises from workplace misconduct.

Generally, human rights legislation is considered quasi-constitutional and as such, supersedes any conflicting statute, unless specifically stated to the contrary in the human rights enabling legislation. ¹⁵

Apart from the quasi-constitutional status argument, the human rights process does deal with broader issues from a public interest perspective and includes other forms of non-monetary relief, including reinstatement, which is not available by a workers’ compensation claim.

(See the decision of the HRTO in which the applicant was in receipt of WSIB benefits since her dismissal and was awarded $75,000 in compensatory damages. This issue was not raised.)

Supreme Court Qualifier

This would lead to the presumption of some comfort that the human rights regime was safe from erosion of its powers due to the workers’ compensation remedy. This may, however, not be a correct conclusion.

An action was commenced in Quebec by civil action seeking a remedy allowed by the Quebec Charter of Human Rights and Freedoms for exemplary damages based on a sexual assault. The plaintiff had also received compensation under the Quebec workers’ compensation statute for an “employment injury”.

The claim was denied ¹⁶ due to the application for workers’ compensation benefits, notwithstanding the quasi-constitutional status of the Charter remedy. The court did note that an arbitrator under a collective agreement would have been similarly prevented from making a damage award, but not “other remedial measures such as reinstatement or reassignment”.

This conclusion, if applied to a human rights statute, would allow the tribunal to still offer comparable specific remedies or public interest awards.

It is difficult to contemplate that the human rights remedy may be dramatically undone for those employed in an industrial work environment or otherwise covered by worker’s compensation legislation by a judicial or other reworking of workers’ compensation remedies, but clearly the argument remains, given the Supreme Court decision above. ¹⁷

The success of this argument would mean that give the relevance of a workers’ compensation scheme the tribunal would be deprived of significant jurisdiction, undoubtedly a significant conclusion. ¹⁸

Should this be so, the victim employee who has not brought a workers’ compensation claim on a timely basis may well find herself without a remedy. ¹⁹

Footnotes

Most statutes governing such benefits use a similar definition of define “accident” to include willful and intentional conduct. Such is the case in British Columbia, Manitoba, the federal Government Employees Workers Compensation Act and the Merchant Seaman Workers Compensation Act, Alberta, Saskatchewan, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Labrador & Newfoundland, the Yukon.The legislation of Nanavut does not use a similar definition pattern as the above jurisdictions but does state these words which will likely include intentional conduct
Master Laycock of the Court of Queen’s Bench in Alberta in the March 2013 decision of Ashraf v SNC Lavalin ATP Inc.
It may be noted that on the return of the first appeal, the plaintiff amended the action to plead a constructive dismissal based on the same allegations which was also dismissed. This latter aspect of the decision was set aside by the Court of Appeal as the scheme of the workers’ compensation regime was powerless to deal with such a claim. The constructive dismissal plea was allowed to stand
It also may be noted that counsel’s failure to submit the complaint to the Workers’ Compensation Board led to a successful civil action for negligence brought by Mr. Ashraf.
Li v Canadian Natural Resources
Deol v Dreyer & Davison
There was also a motion to dismiss based on the argument of exclusive jurisdiction of the human rights regime.
In Ontario, this entitlement has been further refined by a guidance statement known as policy document 15-03-02 which acknowledges that persistent harassment will be covered where the most recent event has led to an acute psychological reaction. The application of the policy is made mandatory for the Appeals Tribunal by section 126(1) of the Act
Nova Scotia (Workers’ Compensation Board) v Martin
Plesner v British Columbia Hydro and Power before the British Columbia Court of Appeal
by The Workers Compensation Amendment Act 2011, S.B.C. 2012, c.23
Ontario Court of Appeal in which an award for the intentional infliction of mental distress was allowed.Prinzo
as set out in Honda v Keays
The Workplace Safety and Insurance Tribunal in its decision released on May 22, 2014 in case 727/13.
This principle was stated quite clearly in 2008 by the Nova Scotia Court of Appeal in Halifax (Regional Municipality) v. Nova Scotia (Human Rights Commission)
Béliveau St-Jacques v Fédération des employéeset employés de services publics
Most workers’ statutory compensatory schemes allow for the benefits and then deny the applicant the right to claim “all rights of action (statutory or otherwise)”, which presumably will be argued to include the right to make a human rights complaint
A tribunal decision did refer to a similar plea in Snow v Honda (Joachim) in which the above case was not argued
If in time, there would always be a remedy for constructive dismissal